Why Checks are Becoming Obsolete

Everyday there are bills to be paid and things to be purchased. Money transfers hands in stores, at banks, for services and goods. For many years a check was the preferred method for transferring money between two parties.

Checks were far safer than carrying or sending cash. They also provided a convenient way to move funds and pay bills. In more recent times other forms of payment have eclipsed the benefits of checks and have rendered checks obsolete.

Amid the aftermath of the September 11th 2001 terrorist attacks on the United States no planes were permitted to fly over US soil. This crippled the system of checks clearing vital to the transfer of money through checks.

For a check to clear it needs to physically be transported to the other bank that has the funds so that the funds can be pulled from that bank. With no planes flying there was no way to clear checks. In response the US government instituted Check 21 legislation.

Check 21 allowed any institution that receives a check to convert it into an electronic transaction and clear the check electronically. This allows for checks to clear without actually physically needed the check to be transported.

Check 21 delivered the crushing blow to checks, making them completely obsolete. If a check can be converted into an electronic transaction there is no need for a physical check any longer/

While Check 21 finally made checks obsolete they were already becoming obsolete for many other reasons:

* Cost

Many banks still charge a fee to purchase checks. This fee can range anywhere from a few dollars up to over one hundred dollars for some types of business checks. If the checks on an account cost money then it becomes more cost effective to use fewer checks, or cease using them altogether.

* Security

When giving someone a check you are providing them with access to a lot of information. On the face of the check is your account number, your name, address, sometimes even your phone number or drivers license number.

All this personal information can be used by potential identity thieves This information is best kept strict control over, by giving out a check you jeopardize the security of your personal information. Using a check card or a debit card limits this information and keeps your personal data out of potentially dishonest hands.

* Convenience

Carrying a checkbook around can be clumsy and burdensome. While they easily fit into a purse they do not fit anywhere into a wallet and can be uncomfortable to carry in a pocket. In addition, having to pull out the checkbook, find a pen, and make out the checks at a point of sale can be time consuming.

Having a check card on hand will allow access to the money in a checking account without requiring the space, the pen, or the time involved in writing out the check. A little card will easily fit into a wallet or pocket, easily replacing the burdensome checkbook.

* Liability

When a merchant received a check there is no way to guarantee that the funds will be available when the merchant comes to collect. There are millions of bad checks out there, written by people that had no intention of actually honoring the check.

Even if a check is verified by the merchant with the bank it is drawn on there is no guarantee that the money will still be in the bank when the merchant comes to collect.

When a check card is authorized the merchant has an extremely good chance of actually receiving payment for that transaction. This makes checks a far greater liability than other forms of payment.

Checks are quickly becoming obsolete. On many fronts checks are proving unreliable and burdensome. Check cards offer a safer, more convenient alternative and make checks outdated.